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Directors Report of MIC Electronics Ltd.

Mar 31, 2016

To

The Members,

Dear Shareholders,

The Directors have pleasure in presenting their 28th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March 2016.

Financial summary or highlights / Performance of the Company:

The financial performance of the Company for the financial year ended 31st March, 2016, is summarized below:

( Rs. in Lakhs)

Particulars

31st March 2016 (12 Months)

31st March 2015 (12 Months)

Revenue From Operations

21,763.56

15,854.18

Other income

338.51

359.77

Total income

22,102.07

16,213.94

Expenditure

17,417.10

15,355.92

Profit before depreciation

4,684.97

858.02

Less: Depreciation

751.04

766.96

Profit before exceptional items and Tax

3,933.93

91.06

Exceptional Items

19,620.03

48.94

Profit / Loss before Tax

(15,686.10)

42.12

Less: Provision for Taxation

4597.54

177.50

Profit / Loss after Tax

(11,088.56)

219.62

EPS- Basic (In Rs.)

(7.71)

0.18

Diluted (In Rs.)

(5.91)

0.12

State of Company''s Affairs

During the year under review, your Company has achieved significant business growth. The Company has recorded overall sales growth of products.

The company has recorded a profit of Rs. 39.34 Crores before Exceptional Items of Rs. 196.20 Crores.

Exceptional Items includes depletion in value of Inventories of Rs. 159.52 Crores, bad debts and debit balances written off Rs. 36.68 Crores during the year.

After Exceptional Items the company incurred a Net Loss of Rs. 110.89 Crores.

After confirmation we will place the same at Report.

Dividend

Your Directors doesn’t recommend any Dividend on Equity Share Capital of your Company for the financial year ending 31st March, 2016.

Transfer to Reserves

The Company has during the period under review, has not transferred any amount to its General Reserves.

Changes in Share Capital

During the period under review, your Company has:

Converted 4,72,14,848 warrants into Equity Shares in 1:1 ratio being a part of 7,44,62,070 Convertible Equity Shares Warrants allotted to the Promoters and Investors on 25th November 2014 and Pending Warrants for Conversion as on 31st March 2016 is 1,08,22,222, considering earlier conversion of 16,425,000 warrants as on 19th March 2015.

Conversion details are below:

Particulars

Total No. of CESW Converted

Conversion of Warrants into Equity Shares approved by Board of Directors on 25th July 2015 and same has been listed with Stock Exchanges.

1,13,95,000

Conversion of Warrants into Equity Shares approved by Board of Directors on 30th September 2015 and same has been listed with Stock Exchanges

2,70,87,070

Conversion of Warrants into Equity Shares approved by Board of Directors on 10th November 2015 and same has been listed with Stock Exchanges

87,32,778

Total Warrants Converted during the Financial Year

4,72,14,848

Further 3,30,00,000 Preferential Convertible Share Warrants of Rs. 25/- each (i.e Face Value of Rs. 2/- at a premium of Rs. 23/-) allotted to the Investors on 15th February 2016.

Deposits:

The Company has not invited/ accepted any deposits from the public during the year ended March 31, 2016. There were no unclaimed or unpaid deposits as on March 31, 2016.

Change in the Nature of Business, if any

There is no change in the nature of business of the Company Management Discussion and Analysis Report

Management’s discussion and analysis report for the year under review, as stipulated under Clause 27(2) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

Employees Stock Options Plan 2006 (MIC ESOP 2006)

The Company had established MIC Electronics Limited Employees Welfare Trust in 2005 to create Employee Stock Option Plan.

On 12 th August 2006, the Shareholders approved that ESOP to issue 4500000 (Face Value Rs.2/-) stock options of the Company to its employees through the trust.

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 30th November 2010 under the MIC Electronics Ltd Employees Stock Options Plan, 2006 are as under:

During the year 7,49,100 shares which were lying in the trust were distributed to the employees. No employee was issued Stock Option, during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant.

Particulars of Employees

The details pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 enclosed as Annexure - I.

Further during the year under review, none of the employees are receiving remuneration as set out in Rule (5) (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Subsidiaries and Associates

During the year, the Board has reviewed the affairs of the Subsidiaries. In accordance with Section 129(3) of the Companies Act 2013 we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 is appended as Annexure II to the Board’s Report. The statement also provides the details of performance, financial positions of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www. mic.co.in. These documents will also be available for inspection during business hours at our registered office in Hyderabad.

As on 31st March, 2016, the following are the subsidiaries:

1. MIC Electronics Inc.,USA

2. MIC Green Solutions Private Limited

3. Candilux Private Limited (Formerly MIC Candilux Private Limited)

Consolidated Financial Statements

The audited standalone and Consolidated Financial Statements of the Company which form part of the Annual Report have been prepared in accordance with the provisions of the Companies Act, 2013, the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Accounting Standards (AS-21) on consolidated Financial Statements and the Accounting Standard (AS-2 3) on Accounting for Investment in Associates.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors’ Responsibility Statement, the Board of Directors of the Company hereby confirms:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

(b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period.

(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

(d) The directors had prepared the annual accounts on a going concern basis.

(e) The Directors, have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. and

(f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Statement on Declaration given by independent directors

The Company has received necessary declaration from each independent director under Section 149 (7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 27(2) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Particulars of Contracts or Arrangements with related parties

Company has transactions with related parties, which were continuing from previous financial years. However all those are entered under ordinary course of business and are at arm’s length transactions. Therefore, consent of the shareholders under Section 188 does not require. The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 is prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure - III to this Report.

Corporate Social Responsibility (CSR)

The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Companies Act, 2013 and hence it is not required to formulate policy on corporate social responsibility.

Risk Management Policy

The Company has policy for identifying risk and established controls to effectively manage the risk. Further the Company has laid down various steps to mitigate the identified risk.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

Corporate Governance

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

Number of Meetings of the Board of Directors

The Board met eight times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The maximum interval between any two meetings did not exceed 120 days.

Directors

The Board of the Company has an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on 31st March, 2016, the Board consists of 6 members, two of whom are executive directors, one non-executive director and three are independent directors. The Board periodically evaluates the need for change in its composition and size.

As per the provisions of the Companies Act 2013, Dr. M V Ramana Rao retires at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board recommends his re-appointment.

Details of Directors or Key Managerial Personnel who were appointed or have resigned during the year.

- The Members at the 27th Annual General Meeting held on 30th September 2015:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and any other applicable provisions thereof Shri Atluri Venkata Ram (DIN 00753969), Director of the Company retires by rotation, and re-appointed as Director.

Pursuant to the provisions of section 149 150, 152, Schedule IV and any other applicable provisions of the Companies Act, 2013, and the Rules made there under Dr. Venkata Ramani Vedula (DIN: 01298522) has appointed as Independent Director of the company for a period up to 30th March, 2020.

Pursuant to the provisions of Section 196, 197 and 203 read with Schedule V and all other applicable provisions of the Companies Act 2013 and the Companies (Appointment and Qualifications) Rules 2014 (including any statutory modification(s) and read with Schedule IV to the Companies Act, 2013 or enactment thereof for the time being in force Dr. M V Ramana Rao (DIN 00010301), Re-appointment as Managing Director of the Company for a period of 3 years commencing from 30th November 2015 to 29th November 2018.

Pursuant to the provisions of Section 196, 197 and 203 read with Schedule V and all other applicable provisions of the Companies Act 2013 and the Companies (Appointment and Qualifications) Rules 2014 (including any statutory modification(s) and read with Schedule IV to the Companies Act, 2013 or enactment thereof for the time being in force Mr. L N Malleswara Rao (DIN 00010318), Re-appointment as Executive Director of the Company for a period of 3 years commencing from 31st December 2015 to 30th December 2018.

- Mr. Malleswara Durga Prasad resigned as Company Secretary with effect from 2 6th December 2015 and continued as CFO of the Company

- Pursuant to the provisions of Section 152 of the Companies Act, 2013 and any other applicable provisions thereof Dr. M V Ramana Rao (DIN 00010301), Director of the Company retires by rotation, and being eligible offers himself for re-appointment.

Committees of the Board

Currently, the Board has three Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

A detailed note on the Board and its committees is provided under the corporate governance report section in this Annual Report.

Statutory Auditors

The Statutory Auditors of the Company, M/s. Pavuluri & Co., were appointed at the 2 6th Annual General Meeting till the conclusion of the 29th Annual General Meeting (AGM) of the Company. In terms of Section 139 of the Companies Act 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, M/s. Pavuluri & Co., Chartered Accountants, as the Auditors of the Company is placed for ratification by the shareholders. In this regard the Company has received a certificate from the auditors to the effect if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Replies to the observations made in Auditor''s Report:

Audit Qualification (each audit qualification separately):

Details of Audit Qualification:

i. Reference is invited to Note 3.05 of the financial statements, The Company has not provided the interest on working capital loan from SBI for Rs.11.87crores during the year (Previous Year Rs. 7.21 crores) as the account has become NPA.

Under accounting principles generally accepted in India, the company should have made a provision for interest expense of Rs.11.87 crores. Had the company made a provision for the same the current year loss would have been higher by the said amount.

ii. Reference is invited to Note 3.07 of the financial statements, The Company has not provided the interest on unsecured loans for Rs. 4.23 crores and interest on term loans for Rs. 2.73crores for the year ended 31st March 2 016, since the company is pursuing the matter for settlement.

Under accounting principles generally accepted in India, the company should have made a provision for interest expense of Rs. 6.96crores (Previous Year Rs 8.14 crores). Had the company made a provision for the same, the current year loss would have been higher by the said amount.

iii. Reference is invited to Note 3.12 of the financial statements, the Company’s Capital Advances to the extent of Rs. 9.52 crores, “we are unable to ascertain whether such balances as at balance sheet date are fully recoverable. Accordingly, we are unable to ascertain the impact, if any, that may arise in case any of these advances are subsequently determined to be doubtful of recovery. Had the Company made a provision for the same, the loss for the period would have been higher by the said amount”.

iv. Reference is invited to Note 3.15 of the financial statements, during the year the company has written off Rs. 33.49 crores as bad debts. However, the Company’s Trade Receivables still consists of Rs. 6.67 crores that are more than three years old and “we are unable to ascertain whether such balances as at balance sheet date are fully recoverable. Accordingly, we are unable to ascertain the impact, if any, that may arise in case any of these receivables are subsequently determined to be doubtful of recovery. Had the Company provided provision for the same, the loss for the period would have been higher by the said amount”.

v. Reference is invited to Note 3.17 of the financial statements, the Company’s Other Advances to the extent of Rs. 47.91 crores, “we are unable to ascertain whether such balances as at balance sheet date are fully recoverable. Accordingly, we are unable to ascertain the impact, if any, that may arise in case any of these advances are subsequently determined to be doubtful of recovery. Had the Company provided provision for the same, the loss for the period would have been higher by the said amount”.

vi. Reference is invited to Note 3.27 of the financial statements, there are pending litigations against the company, not acknowledged by the company to the extent of Rs. 3.42 crores. There are material uncertainties regarding the outcome of these litigations where in an unfavorable decision could result in cash outflows for the company.

For Audit Qualification(s) where the impact is quantified by the auditor, Management''s Views:

i. The loan has become NPA and management has submitted the proposal for settlement with the banks and is under consideration by the bankers and we are of the opinion that no provision is necessary.

ii. Due to tight liquidity position, company has approached the lenders of unsecured loans and term loans for one time settlement. Since the company is of the opinion that the lenders will consider favorably, interest has not been provided on such loans.

iii. Company has given advances to various suppliers for supply of capital goods for its LED Display Division’s expansion projects. The management is closely pursuing with such suppliers for supply of such capital goods. We are insisting such suppliers to either supply the goods or refund the advance amount without further delay. The management is confident of adjustment of such capital advances and hence no provision has been made.

iv. Due to the prevailing recessionary trend in the industry in the last 3 to 4 years, significant portion of trade receivables remain uncollected. The management has setup a separate team for close monitoring and collection of such overdue receivables and based on their recommendation we are already written off bad debts and other debit balances to the extent of Rs. 33.49 crores. The management is confident of collecting the remaining overdue trade receivables over a period of time and hence no provision has been made.

v. The above advances include a sum of Rs.1.90 Crores given as advance for acquisition of shares in those companies which are engaged in manufacture of LED lighting products and power electronics and the management is insisting such companies to allot/transfer shares at the earliest or else refund the invested amount. Balance of Rs. 46.01 crores related to advances given to various suppliers for supply of materials / services in the ordinary course of business. The management is closely pursuing with such suppliers for supply of materials / services. We are insisting such suppliers to either supply the materials / services or refund the advance amount without further delay. The management is confident of adjustment of such advances and hence no provision has been made.

vi. The litigation is still pending at Court and management is of the opinion that the result will be favorable to the company and hence no provision is necessary.

Internal Auditor

The Company has an in-house internal audit team which monitors the effectiveness of the internal control systems. It reports to the Audit Committee about the adequacy and effectiveness of the internal control system of your Company. Your Company also retains the services of M/s. Sarath & Associates Chartered Accountants.

The recommendations of the internal audit team on improvements in the operating procedures and control systems are also presented to the Audit Committee and the business to use these as tools for strengthening the operating procedures.

Secretarial Auditor

The Board has appointed Y Ravi Prasada Reddy Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as Annexure IV to this Report.

Extract of the Annual Return

The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure V to this Report.

Material changes and commitments, if any, affecting the financial position of the company

There are no Material changes and commitments in the business operations of the Company from the Financial Year ended 31st March 2016 to the date of signing of the Director’s Report.

The company and State Bank of India have mutually agreed for a one time settlement of working capital loan as per the settlement letter dated 3rd August 2016. The bank has agreed to waive the total outstanding interest of Rs. 22.46 crores. As a result, the total outstanding due of the company towards this loan has reduced to Rs. 57.43 Crores.

Details of Significant and Material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company''s operations in future

No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - VI to this Report.

Particulars of loans, guarantees or investments under section 186

Loans, Guarantees, Investments given during the Financial Year ended on 31st March 2016, which attracts the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, form part of the notes to the financial statements provided in this Annual Report.

Declaration with the compliance with the code of conduct by Members of the board and Senior Management personnel

The Company has complied with the requirements about code of conduct for Board members and Senior Management Personnel.

The said policy is available on the website of the Company.

Vigil Mechanism/Whistle Blower Policy

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company’s website.

Mechanism for Board Evaluation

Clause 27(2) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 states that the board shall monitor and review the board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors.

Schedule IV of the Companies Act, 2013 states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The Directors evaluation was broadly based on the parameters such as understanding of the Company’s vision and objective, skills, knowledge and experience, participation and attendance in Board/Committee meetings; governance and contribution to strategy; interpersonal skills etc.

The Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance.

A meeting of the Independent Directors was also held which reviewed the performance of Non-Independent Directors, Chairman and the quality, quantity and timelines of flow of information between the Company management and Board.

Disclosure pertaining to sexual harassment of women at workplace

The company as required under the provisions of “The Sexual Harassment of Women at Workplace (prohibition, Prevention and Redressal) Act, 2013” has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Woman at Workplace and matters connected therewith of incidental thereto.

During the Financial year ended 31st March, 2016 the Company has neither received any complaints nor there are any pending complaints pertaining to sexual harassment.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and fixing their remuneration. The Remuneration Policy is placed at the website www.mic.in.

Acknowledgements

The Directors would also like to place on record their appreciation for the support & services of various Government & quasi Government organizations like Department of Information technology & Communications, Department of Commercial Taxes, Customs & Central Excise, Income Tax, etc. The Directors also thank the officials of the Bankers.

The Directors would also like to thank the esteemed shareholders for their constant support, guidance & advice.

By order of the Board

For MIC Electronics Limited

Sd/-

Dr. M. V. Ramana Rao

Date : 03.09.2016 ( Managing Director)

Place : Hyderabad (DIN 00010301)


Mar 31, 2015

The Directors have pleasure in presenting the 27th Annual Report on the business and operations of the Company and operations of the Comapny and the accounts for the Financial Year ended 31st March 2015.

Financial summary or highlights / Performance of the Company:

The financial performance of the Company for the financial year ended 31st March, 2015, is summarized below:

(Rs. in Lakhs)

Particulars 31st March 2015 31st March 2014 (12 Months) (9 Months)

Revenue From Operations 15,854.18 8,779.18

Other income 359.77 138.36

Total income 16,213.94 8,917.54

Expenditure 15,404.86 9,372.40

Profit before depreciation 809.08 -454.87

Less: Depreciation 766.96 444.81

Profit before exceptional items and Tax 42.12 -899.68

Exceptional Items - -5388.47

Profit before Tax 42.12 -6288.14

Less: Provision for Taxation 177.50 1840.96

Profit after Tax 219.62 -4447.18

Profit brought forward from earlier year - -

Appropriation:

Transfer to General reserve - -

Proposed Dividend - -

Dividend Tax - -

Total Appropriation - -

Profit after appropriation 219.62 -4447.18

EPS- Basic (In Rs.) 0.18 -4.34

Diluted (In Rs.) 0.12 -2.47

State of Company's Affairs

During the year under review, your Company has achieved significant business growth. The Company has recorded overall sales growth of Products. The Company's Net Profit for the year was 2.19 Crores.

Previous year figures are not comparable since they represent only 9 months where as current year represent 12 months.

Dividend

Your Directors doesn't recommend any Dividend on Equity Share Capital of your Company for the financial year ending 31st March, 2015.

Transfer to Reserves

The Company has during the period under review, has not transferred any amount to its General Reserves.

Deposits:

The Company has not invited/ accepted any deposits from the public during the year ended March 31, 2015. There were no unclaimed or unpaid deposits as on March 31, 2015.

Change in the Nature of Business, if any

There is no change in the nature of business of the Company.

Changes in Share Capital

During the period under review, your Company has allotted 7,44,62,070 Preferential Convertible Share Warrants of Rs. 3/- each (i.e Face Value of Rs. 2/- at a premium of Rs.1/-) to the Promoters/Investors. Out of which, the Board of Directors has converted and allotted 1,64,25,000 Preferential Convertible Share Warrants into equity shares on 19th March, 2015.

Management Discussion and Analysis Report

Management's discussion and analysis report for the year under review, as stipulated under Clause 49 of the Listing agreement with Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

EMPLOYEES STOCK OPTIONS PLAN 2006 (MIC ESOP 2006)

The Company had established MIC Electronics Limited Employees Welfare Trust in 2005 to create Employee Stock Option Plan.

On 12th August 2006, the Shareholders approved that ESOP to issue 4500000 (Face Value Rs.2/-) stock options of the Company to its employees through the trust.

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 30th November 2010 under the MIC Electronics Ltd Employees Stock Options Plan, 2006 are as under:

ESOP 2006 scheme was ended on 24-10-2009, however 7,49,100 shares were lying in the trust because of Non-exercise of the options due to heavy Fringe Benefit Tax disproportion to price of the scrip and few options because of resignation of employees in general.

Particulars of Employees

The details pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 enclosed as Annexure - I.

Further during the year under review, none of the employees are receiving remuneration as set out in Rule (5) (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Subsidiaries and Associates

At the beginning of the year we had 4 subsidiaries. As on 31st March, 2015 we have only 3 subsidiaries.

During the year, the Board has reviewed the affairs of the Subsidiaries. In accordance with Section 129(3) of the Companies Act 2013 we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 is appended as Annexure II to the Board's Report. The statement also provides the details of performance, financial positions of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www. mic.co.in. These documents will also be available for inspection during business hours at our registered office in Hyderabad.

During the year, disinvestment was made in the following subsidiary:

On 1st January, 2015, the entire shareholding in Maave Electronics Private Limited. The Company has taken Valuation Certificate from Independent Valuer and accordingly the business has been transferred for a consideration of Rs. 2.5 Crores/-.

As on 31st March, 2015, the following are the subsidiaries:

1. MIC Electronics Inc.,USA

2. MIC Green Solutions Private Limited

3. MIC Candilux Private Limited

Consolidated Financial Statements

The audited standalone and Consolidated Financial Statements of the Company which form part of the Annual Report have been prepared in accordance with the provisions of the Companies Act, 2013, the Listing Agreement, the Accounting Standards (AS-21) on consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investment in Associates.

Directors' Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis; and

(e) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Statement on Declaration given by independent directors

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Particulars of Contracts or Arrangements with related parties:

Company has transactions with related parties, which were continuing from previous financial years. However all those are entered under ordinary course of business and are at arm's length transactions. Therefore, consent of the shareholders under Section 188 does not require. The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 is prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure - III to this Report.

Corporate Social Responsibility (CSR)

The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Companies Act, 2013 and hence it is not required to formulate policy on corporate social responsibility.

Risk Management Policy

The Company has policy for identifying risk and established controls to effectively manage the risk. Further the Company has laid down various steps to mitigate the identified risk.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

Corporate Governance

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Practicing Chartered Accountant confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

Number of Meetings of the Board of Directors

The Board met nine times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013.

Directors

The Board of the Company has an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on 31st March, 2015, the Board consists of 6 members, two of whom are executive directors, one non-executive director and three are independent directors. The Board periodically evaluates the need for change in its composition and size.

As per the provisions of the Companies Act 2013, Mr. Atluri Venkata Ram retires at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board recommends his re-appointment.

Details of Directors or Key Managerial Personnel who were appointed or have resigned during the year.

Mr. J. Prasanna Kumar, Director of the Company has resigned during the year and Dr. Venkata Ramani Vedula has appointed as Additional Director through circular resolution passed on 31st March, 2015.

During the year Mr. Vijay Kumar Ch., was resigned as Company Secretary of the Company. Mr. Malleswara Durga Prasad has been appointed as CFO and Company Secretary.

Committees of the Board

Currently, the Board has three Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Grievance Committee

A detailed note on the Board and its committees is provided under the corporate governance report section in this Annual Report.

Statutory Auditors

The Statutory Auditors of the Company, M/s. Pavuluri & Co., were appointed at the 26th Annual General Meeting till the conclusion of the 29th Annual General Meeting (AGM) of the Company. In terms of Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, M/s. Pavuluri & Co., Chartered Accountants, as the Auditors of the Company is placed for ratification by the shareholders. In this regard the Company has received a certificate from the auditors to the effect if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Replies to the observations made in Auditor's Report:

S. No. Qualified by the Auditor Explanation

Reference is invited to Note 3.05 of the financial Interest on term Loan from SBI Bank of Rs. 7.21 statements, The Company has not provided the Crores for the current quarter has not been pro- interest on working capital loan from SBI for Rs 7.21 vided since the account has been declared as NPA crores since the account has become NPA. by the Bank and the Management intends to settle 1. the matter with the Bank amicably. Under accounting principles generally accepted in India, the company should have made a provision for interest expense of Rs 7.21 crores. Had the company made a provision for the same the current year profit would have been lower by the said amount.

Reference is invited to Note 3.07 of the financial Since the management intends to negotiate with statements, The Company has not provided the the lenders of the Unsecured loans for settlement, interest on unsecured loans for Rs 4.23 crores and interest amount for the year amounting to Rs. interest on term loans for Rs 3.91 crores for the year 8.14 Crores was not provided. ended 31st March 2015, since the company is pursuing the matter for settlement. 2. Under accounting principles generally accepted in India, the company should have made a provision for interest expense of Rs 8.14 crores. Had the company made a provision for the same, the current year profit would have been lower by the said amount. Had the Company made a provision for the same, the profit for the period would have been lower by the said amount."

Reference is invited to Note 3.12 of the financial Company has given advances to various statements, the Company's Capital Advances to the suppliers for supply of capital goods for its LED extent of Rs 11.19 crores, "we are unable to ascer- Display Division's expansion projects. The tain whether such balances as at balance sheet date management is closely pursuing with such are fully recoverable. Accordingly, we are unable to suppliers for supply of such capital goods and 3. ascertain the impact, if any, that may arise in case insisting such suppliers to either supply the any of these advances are subsequently determined goods or refund the advance amount without to be doubtful of recovery. Had the Company made further delay. The management is confident of a provision for the same, the profit for the period adjustment of such capital advances and hence would have been lower by the said amount." no provision has been made.

Reference is invited to Note 3.15 of the financial Due to the prevailing recessionary trend in the statements, the Company's Trade Receivables to the industry in the last 3 to 4 years, significant portion extent of Rs 51.20 crores are more than three years of trade receivables remain uncollected. The old and "we are unable to ascertain whether such management is closely monitoring for collection balances as at balance sheet date are fully of such overdue receivables. The management is 4. recoverable. Accordingly, we are unable to ascertain confident of collecting such overdue trade the impact, if any, that may arise in case any of these receivables over a period of time and hence no receivables are subsequently determined to be provision has been made. doubtful of recovery. Had the Company provided provision for the same, the profit for the period would have been lower by the said amount."

Reference is invited to Note 3.17 of the financial The above advances include advances given to statements, the Company's Other Advances to the various suppliers for supply of materials / extent of Rs 5.50 crores, "we are unable to ascertain services in the ordinary course of business and whether such balances as at balance sheet date are other purposes. The management is closely fully recoverable. Accordingly, we are unable to pursuing with such suppliers for supply of 5. ascertain the impact, if any, that may arise in case materials / services. We are insisting such any of these advances are subsequently determined suppliers to either supply the materials / services to be doubtful of recovery. Had the Company or refund the advance amount without further provided provision for the same, the profit for the delay. The management is confident if adjustment period would have been lower by the said amount." of such advances and hence no provision has been made.

Reference is invited to Note 3.31 of the financial First Leasing Company of India Ltd transferred statements, the Company has not made a provision the lease rentals receivables from MIC Electronics for lease rentals for the financial year to the extent Ltd to Reliance Capital Ltd. As per the agreement, of Rs.4.72 crores.Under accounting principles lease rentals are payable in 59 monthly instalments 6. generally accepted in India, the company should to Reliance Capital Ltd and the last instalment is have made a provision for lease rentals. Had the due in Dec'14. MIC Electronics Ltd received a company made a provision for the same the current notice from Reliance Capital Ltd on 20.01.2012 year profit would have been lower by the said amount. about the loan agreement termination for delay in payment of lease rentals. Subsequently First Leasing Company stopped billing lease rentals w.e.f 01.04.2012. Hence MIC Electronics Ltd stopped recognizing lease rentals in the books from 01.04.2012. The unrecognized lease rentals from Apr'14 to Mar'15 amount to Rs 47,196,000/-

Secretarial Auditor

The Board has appointed Mr. D V M Gopal, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure IV to this Report.

Extract of the Annual Return

The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure V to this Report.

Material changes and commitments, if any, affecting the financial position of the company

There are no Material changes and commitments in the business operations of the Company from the Financial Year ended 31st March 2015 to the date of signing of the Director's Report.

Details of Significant and Material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company's operations in future

No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - VI to this Report.

Particulars of loans, guarantees or investments under section 186

Loans, Guarantees, Investments given during the Financial Year ended on 31st March 2015, which attracts the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, form part of the notes to the financial statements provided in this Annual Report.

Declaration with the compliance with the code of conduct by Members of the board and Senior Management personnel

The Company has complied with the requirements about code of conduct for Board members and Senior Management Personnel. The said policy is available on the website of the Company.

Vigil Mechanism/Whistle Blower Policy

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website.

Mechanism for Board Evaluation

Clause 49 of the Listing Agreement states that the board shall monitor and review the board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors.

Schedule IV of the Companies Act, 2013 states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The Directors evaluation was broadly based on the parameters such as understanding of the Company's vision and objective, skills, knowledge and experience, participation and attendance in Board/Committee meetings; governance and contribution to strategy; interpersonal skills etc.

The Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance.

A meeting of the Independent Directors was also held which reviewed the performance of Non-Independent Directors, Chairman and the quality, quantity and timelines of flow of information between the Company management and Board.

Disclosure pertaining to sexual harassment of women at workplace

During the Financial year ended 31st March, 2015 the Company has neither received any complaints nor there are any pending complaints pertaining to sexual harassment.

Acknowledgements

The Directors would also like to place on record their appreciation for the support & services of various Government & quasi Government organizations like Department of Information technology & Communications, STPI, Department of Commercial Taxes, Customs & Central Excise, Income Tax, etc. The Directors also thank the officials of the Bankers.

The Directors would also like to thank the esteemed shareholders for their constant support, guidance & advice.

By the Order of the Board

For MIC Electronics Limited

Sd/-

(Dr. M V Ramana Rao)

Managing Director

Date : 05.09.2015

Place : Hyderabad


Mar 31, 2014

Dear Shareholders,

The Directors have pleasure in presenting the 26th Annual Report on the business and operations of the Company along with the Audited Balance Sheet and Profit & Loss Account for the period ended 31st March 2014 (9 months).

FINANCIAL RESULTS

Financial Results of the Company for the period under review along with the figures for previous period are as follows.

(Rs. in crores)

Particulars 2013-14 2012-13 (9 Months) (9 Months)

Net Sales / Income from Operations 87.79 71.51

Other Income 1.75 5.08

Total income 89.54 76.59

Profit / Loss before interest, (4.09) 9.12 depreciation & tax

Less : Interest 8.64 12.12

Depreciation 4.44 4.48

Profit / (Loss) before Extra (62.88) (7.48) Ordinary items & Tax

Less: Extra Ordinary Items 0.00 0.00

Profit / (Loss) before Tax (62.88) (7.48)

Tax Expenses :

Current Tax 0.00 0.00

Taxes of earlier years written back 6.54 0.00

Deferred Tax Liability / (Asset) 11.86 7.39

Net Profit / (Loss) after Tax (44.47) (14.87)

Add : Balance Carried form 163.99 178.86 Profit & Loss A/c

Profit available for appropriation 119.51 163.99

Dividends 0.00 0.00

Transfer to General Reserve 0.00 0.00

Balance Carried to the Balance Sheet 119.51 163.99

EPS - Basic -4.34 (1.45)

Diluted -2.47 (1.45)

REVIEW OF OPERATIONS

During the 9 months period under review the turnover is increased to Rs. 87.79 Crores as compared to previous 9 months'' period turnover of Rs. 71.51 cores. During the period the company has incurred an operating loss of Rs. 62.88 Crores as against operating loss of Rs. 7.48 Crores in the previous period which includes bad debts of Rs. 22 crores were written off and also prior period expenses incurred Rs. 31.88 crores.

DIVIDEND

For the financial year 2013-14 Company didn''t declare any Dividend TRANSFER TO RESERVES

The Company has not transferred any amount to the general reserve since the Company has incurred loss during the period.

CONSOLIDATED FINANCIAL STATEMENTS

The audited stand alone and Consolidated Financial Statements of the company which form part of the annual report have been prepared in accordance with the provisions of the Companies Act, 2013, the Listing Agreement, the Accounting Standards (AS-21) on Consolidated Financial Standard and the Accounting Standard (AS-23) on Accounting for Investments in Associates.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 205C of the Companies Act, 2013, there is no due for remittance to the Investor Education and Protection Fund established by the Central Government.

MARKETING AND EXPORT

Export prospects of the Company are encouraging during the year in the light of increased focus in the area of LED lighting division since overseas market is diverting from conventional lighting to LED lighting. Your directors are positive towards the future.

SUBSIDIARIES

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company and its subsidiaries who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

The company has four subsidiaries

1. MIC Electronics Inc (USA)

2. Maave Electronics Private Limited (India)

3. MIC Green Energy Solutions Private Limited (India)

4. MIC Candilux Private Limited (India)

RIGHTS ISSUES

During the year under review, the Company didn''t make any Rights Issues.

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION

Your Company has complied with all the applicable environmental laws and labour laws. The Company continues to be certified under IS0-14001:2004 and ISO-9001:2008 for its environment management system. The Company has been complying with the relevant laws and has been taking all necessary measures to protect the environment and maximize worker protection and safety.

DETAILS ABOUT MIC ELECTRONICS LTD EMPLOYEES STOCK OPTIONS PLAN 2006 (MIC ESOP 2006)

The Company had established MIC Electronics Limited Employees Welfare Trust in 2005 to create Employee Stock Option Plan.

On 12th August 2006, the Shareholders approved that ESOP to issue 45,00,000 (Face Value Rs.2/-) stock options of the Company to its employees through the trust.

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 30th November 2013 under the MIC Electronics Ltd Employees Stock Options Plan, 2006 are as under:

ESOP 2006 scheme was ended on 24-10-2009, however 7,49,100 shares were lying in the trust because of Nonexercise of the options due to heavy disproportion to price of the scrip and few options because of resignation of employees in general.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013 read with the Articles of Association of the Company, Shri L N Malleswara Rao (DIN 00010318), will retire by rotation at the forthcoming Annual General Meeting is eligible for re-appointment.

Shri N Srinivasa Rao (DIN No. 00014636) and Shri A V V S S C B Sekhar Babu (DIN No. 00692448) both are appointed as Independent Directors of the Company from 30th September 2014 up to 29th September 2019 according to the provisions of Section 149, 152, all other applicable provisions of the Companies Act, 2013, and the rules framed there under read with Schedule IV to the Companies Act, 2013, and Listing Agreement.

DIRECTORS'' RESPONSIBILITY STATEMENT

Directors'' Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956, is given in the Annexure (I) attached hereto and forms part of this Report

Directors confirm to the best of their knowledge and belief that:

I. In the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departures;

II. The accounting policies selected have been applied consistently, judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March 2014 and of the profit/loss of the Company for the period ended 31st March 2014;

III. Proper and sufficient care is taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

IV. The annual accounts have been prepared for the year ended 31st March 2014 on a ''going concern'' basis;

V Necessary steps have been taken to regularize the qualifications mentioned by the Auditor in his report.

AUDITOR''S AND THEIR REPORT

The Company proposes to Re-appoint M/s. Pavuluri & Co. as Statutory Auditor of the company from the conclusion of 26th Annual General Meeting till the conclusion of this Annual General Meeting until the conclusion of the 29th Annual General Meeting to be held in year 2017.

M/s Pavuluri & Co. Chartered Accountants have confirmed that their Re-appointment, if made, shall be in accordance with the provisions of Section 139 of the Companies Act, 2013.

INSURANCE

The assets of the Company are adequately insured against the loss of fire, riot, earthquake, terrorism, loss profits, etc. and other risks which considered necessary by the management.

DEPOSITS

There are no Fixed Deposits accepted by the Company in the financial year 2013-14.

CORPORATE GOVERNANCE

Pursuant to the provisions of Clause 49 of the Listing Agreement and Section 179 of the Companies Act, 2013, a report on Corporate Governance and Management Discussion and Analysis figures as a part of the Annual Report.

Your Company will continue to implement and adhere in letter and spirit to the policies of good Corporate Governance.

Your Company is committed to good Corporate Governance Practices and following the guidelines prescribed by the SEBI and Stock Exchanges from time to time. The Company has implemented all of its major stipulations as applicable to the Company. The Statutory Auditor''s Certificate dated 3rd September, 2014 in accordance with Clause 49 of the Listing Agreement and report on Corporate Governance is annexed to and forming part of the Directors'' Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management discussion and Analysis as required under the Clause 49 of the Listing Agreement is annexed and forming part of the Directors'' Report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTIONS AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under section 217(1)(e) of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is as given below and forms part of the Directors'' Report.

Conservation of energy:

The operations of the Company are not energy intensive. However, adequate measures have been taken to conserve and reduce the energy consumption by using energy efficient hardware and other equipment. Air conditioners are used only when required and air-conditioned areas have been treated with heat resistant material like sun control film to reduce heat absorption. We believe that energy saved is energy produced.

Research and Development and technology absorption

Your company is an intrinsically R&D driven organization, will continue to focus in its R&D activities in energy efficient true color LED Display and LED Lighting solutions.

LISTING AGREEMENT COMPLIANCE

The Company being listed on both NSE & BSE is complying with all the requirements of the Listing Agreement. The following are the compliance to the Stock Exchanges during the Financial Year.

Applications submitted to National Stock Exchange of India Limited and Bombay Stock Exchange Limited to obtain In-principal approval to issue preferential convertible share warrants to

1. 2,69,95,070 Warrants to Promoters.

2. 5,04,82,000 Warrants to Investors.

The same was pending with NSE & BSE as on 31st March 2014. We received approval from BSE on 21st August 2014 and NSE approval to be received.

The Company has paid Listing Fee for the Financial Year 2014-15 to each of the said stock exchanges and had currently complied with the conditions of the Listing Agreement.

ACKNOWLEDGMENT

The Directors take this opportunity to place on record their sincere thanks to analysts, Banks and Financial Institutions, Insurance Companies, Central and State Governments, Departments and the Shareholders for their support and cooperation extended to the company from time to time.

Directors are pleased to record their appreciation for the sincere and dedicated services of the employees and workmen at all levels, during the year under review and look forward to their continued support over the foreseeable future.

For and on behalf of the Board

Sd/- Sd/-

Dr. M V Ramana Rao Shri L N Malleswara Rao Chairman & Managing Director Executive Director

Place: Hyderabad

Date: 03/09/2014


Jun 30, 2010

The Directors have pleasure in presenting the 22nd Annual Report with the audited statement of accounts of your Comapany for the year ended 30/06/10.

Financial Results

The financial highlights for the year in comparison with the previous year are as under:

(Rs.in Crore>

Particulars 2009-10 2008-09

Total income 233.94 242.57

Profit before interest, depreciation & tax 73.74 71.58

Interest 8.26 6.82

Depreciation 2.99 2.26

Provision for taxation 9.46 (1.91)

Profit after interest, depreciation & tax 53.03 64.41

Transferred to general reserve 5.00 5.00

Deferred tax asset adjustment for earlier years - 2.35

Balance brought forward 159.75 102.70

Balance carried forward to Balance Sheet 207.79 159.75

Results of operations

The financial year 2009-10 was significant for the Company in terms of growth in the LED display and lighting segment and its shifting focus from the InfoTech to the lighting and display segment.

The Compny developed the first 4mm LED Tv in India and host of LED based lighting products. The Company is taking steps to strengthen its position in the fields of media, information technology and communications.

Total income of the Company declined 3.56% Rs. 242.57 crore in 2008-09 to Rs. 233.94 crore in 2009-10, largely on account of drop in revenue from the InfoTech segment. Post tax profit of the Company declined 17.61% from Rs. 64.41 crore in 2008-09 to Rs. 53.03 crore in 2009-10.

Following are the results of operations for the financial year 2009-10.

Revenues: Rs. 231.64 crore Profits: Rs. 54 crore

Dividend

The Companys strategic blueprint encompasses capacity expansion. For the same reason, the Company plans to re-invest business surplus for funding such initiatives. This in turn will grow Shareholder wealth over the medium term. As a result, the Company does not propose to declare dividend for the current year.

Transfer to reserves

The Company proposes to transfer Rs. 5 crore to the general reserve out of the amount available for appropriations. After the appropriations, it is proposed to retain Rs. 48.03 crore from the current years profits.

Financials of subsidiary companies

The Ministry of Corporate Affairs, New Delhi vide its order No: 47/713/2010-CL-III dated 23/11/10 exempted your Company from the requirement of attaching the financial statements of its Subsidiaries in terms of Section 212(1) of the Companies Act, 1956. As per the orders, a gist of the financial statements of each of the subsidiary companies was prepared in terms of the section 212(8) of the Companies Act, 1956 and the same is appended hereto and forms part of the Annual Report.

Consolidated financial statements

The audited stand alone and consolidated financial statements of the Company which form part of the Annual Report were prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standards (AS-21) on Consolidated Financial Statement and the Accounting Standard (AS-23) on Accounting for Investments in Associates in Consolidated Financial Statement.

Corporate Governance

Pursuant to the provisions of Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956, a report on Corporate Governance and Management Discussion and Analysis figures as a part of the Annual Report.

Your Company will continue to implement and adhere in letter and spirit to the policies of good Corporate Governance.

Listing Agreement compliance

The Company being listed on both NSE & BSE is complying with all the requirements of the Listing Agreement. The Company has paid Listing Fee for the Financial Year 2010-11 to each of the said stock exchanges.

Public deposits

During the year under review, the Company neither invited nor accepted any fixed deposits from the public.

Directors

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Shri Somendra Khosla and Shri Nimmagadda Srinivasa Rao, Directors of the Company will retire by rotation at the forthcoming Annual General Meeting and are being eligible for offer for re-appointment.

It is proposed to re-appoint Shri L N Malleswara Rao as an Executive Director for a period of five years effective from 30/12/10.

Keeping in view the present employment market conditions it is proposed to increase the basic salary from Rs. 2 lac to Rs. 3 lacs per month keeping other remuneration terms and conditions of Dr. M V Raman Rao, Chairman & Managing Director unaltered.

Changes in Directorate

With effect from 15th and 26th October 2009 Shri Harsh Mariwala and Shri U. Ramakrishna, Directors respectively resigned due to their preoccupations.

Directors responsibility statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, your Directors confirm to the best of their knowledge and belief that:

I. In the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departures;

II. The accounting policies selected were applied consistently, judgments and estimates that were reasonable and prudent were made so as to give a true and fair view of the state of affairs of the Company as at 30/06/10 and of the profit of the Company for the period ended 30/06/10;

III. Proper and sufficient care was taken to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

IV. The annual accounts for the year ended 30/06/10 were prepared on a going concern basis;

Auditors

M/s. Pinnamaneni & Co., Chartered Accountants, (Registration No. 002661S) statutory auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and has expressed their willingness and eligibility to accept re-appointment

Information required Under Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

Conservation of energy

The operations of the Company are not energy intensive. In view of the growing concern over environment management, the Company took adequate measures to conserve and reduce the energy consumption by using energy efficient hardware and other equipment. Air conditioning equipment is used only when required and air-conditioned areas are treated with heat resistant material like sun control film to reduce heat absorption. We believe that energy saved is energy produced.

Research and Development and technology absorption

Your Company is an intrinsically R&D driven organisation, will continue to focus in its R & D activities in energy efficient true color LED Display and LED Lighting solutions.

A strong embedded technology base was created in the Company and several embedded products were developed, produced and delivered by the Company.

Foreign exchange earnings and outgo

Earnings: Rs. 19,544,040/- Outgo: Rs. 54,323,309/-

Personnel

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, and the Companies (Particulars of Employees) Rules, 1975, as amended forms a part of this report. However, in pursuance to Section 219(1) (b) (iv) of the Companies Act, 1956, this report is being sent to all the Company Shareholders, excluding the aforesaid information and the said particulars are made available at the Companys registered office. The members interested in obtaining information under Section 217(2A) may write to the Company Secretary at its registered office.

Details about MIC Electronics Ltd Employees Stock Options Plan 2006 (MIC ESOP 2006)

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee

Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999 details are as under:

ESOP 2006 scheme was ended on 24/10/09; However 749,110 shares were lying in the trust because of non- exercise of the options due to heavy Fringe Benefit Tax disproportion to price of the scrip and few options because of resignation of employees from the Company.

Board is working on a suitable plan to compensate those employees who could not exercise their options due to disproportion of the price prevailing at the time of the exercise and also other employees in general.

Acknowledgment

The Directors take this opportunity to place on record their sincere thanks to analysts, banks and financial institutions, insurance companies, central and state government departments and the Shareholders for their support and co-operation extended to the Company from time to time.

Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels, during the year under review and look forward to their continued support over the foreseeable future.

For and on behalf of the Board

Sd/-

(Dr. M V Ramana Rao)

Chairman & Managing Director

Sd/- Place: Hyderabad (Shri L N Malleswara Rao)

Date: 30/11/10 Executive Director


Jun 30, 2009

The Directors have pleasure in presenting the Companys twenty first annual report on its business and operations together with the audited statement of accounts for the year ended 30 June 2009.

Financial results

The financial results for the year ended 30th June 2008 are as under:

(Rs. in crores)

Particulars 2008-09 2007-08

Total income ( including other income) 242.57 314.01 Profit before interest, depreciation & tax 71.58 84.21 Interest 6.82 2.58 Depreciation 2.26 1.88 Provision for taxation (net of all referred taxes) (1.91) 13.93 Profit after interest, depreciation & tax 64.41 65.82 Dividend 4.03 4.03 Provision for dividend tax 0.68 0.68 Transferred to general reserve 5.00 5.00 Deferred tax asset adjustment for earlier years 2.35 - Balance brought forward 102.70 46.59 Balance carried forward to Balance Sheet 159.75 102.70

Dividend

Your Directors have recommended a dividend of Rs. 0.40 paise per share (20%) on par value of Rs. 2/- per equity share for your approval.

Transfer to Reserves

The company proposes to transfer Rs. 5.00 crores to the general reserve out of the amount available for appropriations. After the appropriations, it is proposed to retain Rs. 57.05 crores from the current year’s profits.

Review of operations

During the year 2008-09, your company achieved a turnover level (including other income) of Rs.242.57 crore as against Rs.314.01 crore in 2007-08. The company sold 6865 LED display modules and 7141 units of LED Lighting Products in 2008-09.The fall in turnover is due to conscious shift from communications segment to media segment for reasons of profitability. Despite this fall in overall turnover, the company earned a post tax profit of Rs.64.41 crore in 2008-09 as against Rs.65.82 crore in 2007-08. The Profit After Tax (PAT), expressed as a percentage of turnover, has significantly improved from 20.96% in 2007-08 to 26.55% in 2008-09.

Corporate Governance

The Company has been following the principles and practices of good Corporate Governance and has ensured due compliance of the requirements stipulated under Clause 49 of the Listing Agreement with the stock exchanges. A separate report on Management Discussion and Analysis, Auditors Certificate on Compliance Conditions on Corporate Governance are annexed to the annual report.

Listing Agreement Compliance

The Companys equity shares are listed on the Bombay Stock Exchange Limited, Phiroz Jeejeebhoy Towers, Dalai Street, Mumbai - 400 001 and the National Stock Exchange of India Limited, Exchange Plaza, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.

The Company has paid the listing fees for the Financial Year 2009-10 to each of the said stock exchanges and had currently complied with the conditions of the Listing Agreement.

Fixed Deposits

The Company has not accepted any deposits from the public or shareholder during the year.

Directors

Shri Vidyasagar Anisingaraju and Shri Anil Goyal, Directors, retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Changes in Directorate after balance sheet date:

Shri Srikant P Joshi resigned as CEO of the company due to his preoccupations and he will continue to be on the board as Independent Director.

Shri Harsh Mariwala and Shri U Ramakrishna Directors resigned due to their preoccupations.

Your Directors place on record their sincere appreciation for the significant contribution made by the above directors during the tenure.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, your Directors confirm to the best of their knowledge and belief that:

I. In the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departures;

II. The accounting policies selected have been applied consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 30th June 2009 and of the profit of the Company for the period ended 30th June 2009;

III. Proper and sufficient care is taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. The annual accounts have been prepared for the year ended 30th June 2009 on a going concern basis;

Subsidiary Companies

We have four subsidiaries; Info STEP Inc, USA and MIC Technologies (Australia) Pty. Ltd. Australia, MIC Electronics Inc. USA, and Maave Electronics Pvt. Ltd. India, financial statements, directors and auditors report of these are enclosed as required under Section 212 of the Companies Act, 1956.

Consolidated Financial Statements

As prescribed by the Accounting Standards-21 issued by the Institute of Chartered Accountants of India, the audited consolidated financial statements are annexed.

Auditors

M/s. Pinnamaneni & Co., Chartered Accountants, statutory auditors of the Company retires at the conclusion of the ensuing Annual General Meeting, and has expressed their willingness and eligibility to accept re-appointment.

Conservation of energy:

The operations of the Company are not energy intensive. However, adequate measures have been taken to conserve and reduce the energy consumption by using energy efficient hardware and other equipment. Air conditioners are used only when required and air-conditioned areas have been treated with heat resistant material like sun control film to reduce heat absorption. It is proposed to convert all the existing lights in the Kushaiguda and Cherlapally plants of MIC into LED lighting to maximize the benefits of energy savings through this technology. We believe that energy saved is energy produced

Research and Development and technology absorption

MIC proposes to retain and enhance its competitive advantages in the areas of LED Displays and LED Lighting through its ability to customize user oriented products, quality & reliability and customer attractive cost performance attributes. The comprehensive and competent development capabilities nurtured at MIC will enable the Company not only in realising these objectives but also in maximizing user relevant product ranges.

It will be the endeavor of MIC to enhance the overall value in the supply chain, through lateral and backward integration of products by injection of select technologies.

Foreign exchange earnings and outgo

Earnings: Rs. 139,375,712 Outgo: Rs. 293,042,231

Personnel

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, and the Companies (Particulars of Employees) Rules, 1975, as amended forms a part of this report. However, in pursuance to Section 219(1) (b) (iv) of the Companies Act, 1956, this report is being sent to all the Company shareholders, excluding the aforesaid information and the said particulars are made available at the Companys registered office. The members interested in obtaining information under Section 217(2A) may write to the Company Secretary at its registered office.

Details about MIC Electronics Ltd Employees Stock Options Plan, 2006 (MIC ESOP, 2006)

The Company had established MIC Electronics Ltd Employees Welfare Trust in 2005 to create Employee Stock Option Plan.

On 12th August 2006, the Shareholders approved that ESOP to issue 4500000 (Face Value Rs.2/-) stock options of the Company to its employees through the trust.

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 5th December 2009 under the MIC Electronics Ltd Employees Stock Options Plan, 2006 are as under:

Appreciation

Your Directors place on record their sincere appreciation for the significant contribution made by the employees through their dedication, hard work and commitment and the trust reposed on us by investors in general.

We also acknowledge the support and counsel extended to us by the analysts, bankers, government agencies, shareholders and investors at large during the year under review and look forward to their continued support over the foreseeable future.

For and on behalf of the Board

Sd/- Sd/- Place:Hyderabad Dr. M V Ramana Rao Shri L N Malleswara Rao Date:5th December 2009 Chairman & Managing Director Executive Director